Saturday, May 4, 2013

My response to State Senator Daylin Leach

State Senator Daylin Leach wrote a letter to the editor in response to my oped calling for a repeal of the prevailing wage. You should read the whole thing (academic debate is good!), but I think Senator Leach's argument can be summarized by his statement here:

The problem with this argument, of course, is that it completely ignores the impact on the workers themselves. In fact, Mr. Rousu explicitly dismisses any legitimate interest workers may have in earning enough to support their families when he says "whatever wage we can pay in which someone will accept the work." In a recession, or a soft economy such as we have now, workers might be forced to accept work at wages below the poverty level. Their lives would be dismal and their families deprived of even the basics of life. But heck, we'd have more cheap buildings.

I think the Senator is wrong for two reasons.

1. I don't think there is one single case where the government didn't pay "enough to support their families" without a prevailing wage. I will use the definition of the poverty rate. Can anyone come up with a example where the pay by the government would mean a worker is in poverty? If you're thinking about trying, save your time, as you won't be able to. Let's suppose that the wage offered was $12/hour. This is lower than almost any government would pay (even without prevailing wage), but it allows us to analyze Senator Leach's position. A person working full time at this wage, with no overtime, will earn about $24,000 annually.

That is higher the poverty rate for even a family of four! (Link here.) So when the State Senator is talking about wages being low, it's all either a) a hypothetical possibility that hasn't happened yet, or b) it's related to some wage in the Senator's mind that is already higher than the poverty rate. But we can go a bit farther in our analysis. Our $24,000 annual income assumed a single-earner family. With a 2-person family that both earn this wage, you're at about the national average for annual incomes. Without the prevailing wage, we are nowhere near the poverty rate. Why should any government official have the power to choose which workers should be getting paid artificially higher than their market value, and which ones won't? This puts way too much power into the hands of government and invites corruption.

2. One would hope that an elected official's goal is to best serve his/her constituents. It should be to provide as much government service as possible for as low a price as possible. By supporting the prevailing wage, the Senator is arguing that taxpayers deserve fewer services so they can pay some members of society more money than others. This is government at its worst.

The prevailing wage should be repealed. State Senator Leach's arguments that workers will be in poverty without it is incorrect. Further, it gives elected officials way too much power to choose winners and losers, for crony capitalism, and for corruption.

No comments:

Post a Comment